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Hot stock: Venture Corp's 5.93% slide to S$15.86 prompts SGX query

A SUDDEN selloff in shares of electronics manufacturing services (EMS) firm Venture Corp has stunned some stock watchers and sent analysts searching for answers.

Venture shares were down 5.93 per cent to S$15.86 on turnover of two million, as at 3.45pm on Thursday. The unusual trading activity had drawn a query from the surveillance team of the Singapore Exchange around 1.57pm. Venture is yet to respond.

On Wednesday, the US Food and Drug Administration (FDA) announced a series of historic enforcement actions related to the sale and marketing of e-cigarettes to teenagers. Venture is widely believed to be one of the makers of the IQOS, a smokeless tobacco device designed by Philip Morris.

The IQOS uses a heat-not-burn technology so it is different from other e-cigarettes and vaping products. The IQOS is also not yet authorised to be marketed in the US, as Philip Morris has not gained FDA approval.

Market voices on:

The sell down in Venture could be a knee-jerk reaction to the FDA news, CGS-CIMB analyst William Tng suggested: "People could be worried about the lost business opportunity if Venture's customer is not able to sell in the US. But my guess is that no sell-side analyst has US numbers for e-cigs in their earnings forecast for Venture, or at least not in an aggressive way."

UOB Kay Hian analyst Foo Zhi Wei was not sure what promoted the selling either: "If it's the FDA news, it’s actually good for Philip Morris, which can gain more market share. So by right Venture should be unaffected. The other way to think about it is since the FDA is busy clamping down on e-cigs, then the IQOS FDA approval could be delayed."

"But that theory goes against market belief that the IQOS was never big to begin with," Mr Foo said.